It is widely expected that the Internet, and in particular, the World Wide Web will provide an important source of retail commerce with customers shopping via their computers. These computers will communicate with other computers through the well known conventions of the Internet and World Wide Web with “Web sites” displaying various services and merchandise for sale by merchants anywhere in the virtual community of the Web.
Typically, current Web-based transactions involve a customer identifying merchandise on the merchant's Web site to be collected in a virtual “shopping basket”. When the selection process is complete, the customer concludes the order by entering his or her shipping address and preferences for shipping and a method of payment. At this time, the method most frequently used will be a credit card. The customer will input a credit card number and expiration date (normally encrypted for security) and the merchant will have the transaction amount approved by the credit card company for immediate shipping of the merchandise. The credit card company pays the merchant directly and then bills the customer.
While such a system is relatively convenient for holders of credit cards, it effectively excludes from this growing commercial system those who, for whatever reason, prefer to not use credit cards but to pay “directly”, for example, by check, money order, cash or other similar direct payment. While some “on-line” merchants may accept checks, typically they must hold the merchandise until the check is received, defeating much of the convenience of Internet shopping. The reason for this is that checks and other direct payments differ fundamentally from credit cards. With credit cards, the merchant, via the agency of the credit card company, has far greater knowledge about the customer and thus greater assurance of being paid. A merchant accepting a direct payment over the Internet faces the risk that the payment will not be received and further that if the payment is a check, once received, it will not be honored by the deposit institution. Generally, detailed information about the customer from the deposit institution is not available and even if the amount of the funds deposited in the relevant account by the customer were known, the time required for the check to be presented could significantly affect whether it is honored.
What is needed is a system allowing for efficient use of direct payment for Internet purchases.